First, we’re so sorry for your loss. This can be a very challenging time for many reasons, and dealing with property ownership is tough even at the best of times.
You’re thinking, “I inherited a house, what to do with this house?” Should I rent it? Should I sell it? How should I sell it? Maybe your spouse or your parents were the ones that took care of the property. What do you know about landlording a house?
Tons of options open for you, but…
… we can help.
We’re seasoned investors in Connecticut real estate, and we’re looking to buy several houses each month in the Connecticut area. Every month we get calls from those who have inherited a house and are looking to sell the house… so the info below are some tips to help you navigate the process.
I Inherited A House, What Do I Do Next?
Here’s a few important considerations to help you make the right decision:
1) Make sure the mortgage is paid.
This may sound obvious, but if the person who left you a property also had a mortgage (unless it had no mortgage and was paid off, which is great!), you have to pay it (assuming you want to keep the property). You have to make timely mortgage payments. Even if the house isn’t in your name yet the banks can and will attempt to foreclose on the house if there are several missed payments. As long as you communicate with the bank and tell them your situation they may forgive one or two late payments.
Some banks will allow you to assume the loan, while others may force you to refinance into a new loan. But that is if the property can be rented. If it isn’t in good condition you may not attract any renters and the rents you do collect aren’t high enough to cover all the expenses and mortgage payments. It can be more trouble than its worth. If you don’t qualify for a new loan, renting may not even be an option for you.
2) The investment is only as good as the manager.
If dealing with brokers, maintenance, tenants, rent collection and all the nuances of property management isn’t the best use of your time, hire a professional to help you or cash out now. Some people who inherit homes decide to keep the house and rent it for extra income. That’s a great strategy for sure. You just need to be prepared to manage the property and the hassles that can go along with tenants and toilets, clogged drains and middle of the night calls to change a light bulb.
3) Property ownership costs money.
It’s rare to see a building that’s been perfectly maintained. Most inherited houses need major improvements. This is more common here in Connecticut than anywhere else. A lot of landlords don’t like raising rents on good tenants over the years and when it gets tot he point when they have to replace a roof or do major repairs they are shocked by the cost and never squirreled away any more for those repairs.
Consider hiring a professional property inspector to give you a detailed rundown on what you’ll need to do within the next five years, along with estimated costs. Surprises are very, very expensive.
4) Selling a property for top dollar costs money.
If you don’t want to deal with making repairs, updating kitchens, improving landscaping and overall cleanup, don’t worry. We buy Connecticut houses for cash, as-is and cover all the closing costs to you.
5) If the market will continue to grow faster than your other options, hang on to the investment.
We can help you analyze the value of your property today versus the long-term benefits of renting. If you can use the equity in your property in another way that outpaces the performance of the real estate market, you should. If you don’t have anything better to do with the money and the neighborhood is rising in value, hang on – real estate can be a great investment if you know how to correctly read the market.
6) Uncle Sam wants a piece of the action.
Don’t forget to discuss your inheritance with tax and legal professionals before you take action. There are major property and income tax consequences that will dramatically impact the cost of owning your investment. Your new investment can cause you a get a major tax penalty and even if you thought all the numbers worked in your favor in a year that might not be the case.
7) Consider all your options.
In certain situations we may be able to help you structure a lease-option agreement that allows you to rent and sell at the same time – capturing the best of both worlds. You get to collect monthly payments without the headaches that come with managing tenants and sell the house later when you are better prepared. These kinds of deals can be complicated, but our CT investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property in Connecticut – if you sold it today without doing any work, the highest price the market will bear, and the projected value of keeping it as a rental (along with the costs). We can also provide you several options that you can pick from that makes the best financial sense for you.